Khoury v Kassim

• 33 - THE SUPREME COURT OF NEW SOUTH WALES ADMINISTRATIVE LAW DIVISION

30103/98 MICHAEL KHOURY & ORS V MALEK KASSIM T/AS KASSIM CONSTRUCTIONS & ANOR

1 HIS HONOUR: By these proceedings the plaintiffs Michael Khoury, Mary Khoury and David Khoury seek prerogative relief against the first defendant Malik Kassim trading as Kassim Constructions and the second defendant Consumer Claims Tribunal. Michael Khoury is the son of Mary and David Khoury. The first defendant carries on business as a carpenter. The Tribunal has filed a submitting appearance except as to costs.

2 In some respects the evidence in these proceedings is vague, confusing and incomplete but it would appear that the background situation is as follows. In or about 1995 Mary Khoury purchased in her own name, premises at 60 Burgess Street Beverly Park. Shortly thereafter in order to facilitate the re-financing of the premises, she granted to her son Michael a one tenth share in the premises. Thereafter, they held the premises as tenants in common, with Mary holding a nine tenth share and Michael a one tenth share.

3 However, while Mrs Khoury was the sole registered proprietor of the premises, the first defendant on 22 June 1996 gave a quote for building work to be carried out to the property. This involved substantial alterations as set out in plans drawn by Michael Khoury who carried on practice as an architectural draftsperson.

4 The first defendant contends that there was an oral agreement between himself and all plaintiffs that the subject work would proceed in accordance with the quote. There is no doubt that the quote was accepted, but the plaintiffs contend that the contract (which was an oral one) was solely between Mrs Khoury and the first defendant. The first defendant claims that the contract work was executed and a large number of variations were carried out. This became the subject of a heated dispute between the parties and also complaints were made that certain of the work carried out by the first defendant was defective.

5 It would appear that Michael supervised the work, and progress payments were made to the first defendant, by Michael, from an account in his name. It seems that the original contract price was paid but not the amount claimed in respect of the disputed work.

6 On 7 November 1996, Marsdens, solicitors of Campbelltown, wrote on behalf of the first defendant, a letter addressed to "Mr D Khoury and Mr M Khoury" seeking to recover the sum of $23,475 allegedly owed by them to the first defendant. The first defendant later conceded that this claim was erroneously overstated by $3,540.

7 On 13 November 1996 Photios Vouroudis & Co, solicitors, of Burwood, wrote on behalf of Mr and Mrs D Khoury a reply to this letter in which they denied any liability to the first defendant and stated, (inter alia): "We are instructed that the cost of rectifying the abovementioned defective building work, together with the cost of replacing timber which belonged to our client and unlawfully used by Mr Kassim in the construction of the balcony and roof, will exceed the amount of your client's alleged claim.

Further, should this matter proceed further, our client intends to call expert evidence to prove that the amount of timber used on the site is valued for less than the amount of $16,000 which was paid by our client directly to Advance Timber.

Our client assumes that the timber purchased by our client was used by Mr Kassim on another job site. Our client will also call expert evidence to prove that the roof in its present state would not last more than 3 to 4 years, and will need replacement thereafter". 8 Apparently about this time arrangements were made on behalf of the plaintiffs to obtain experts reports with regard to the estimated cost of rectification of the alleged defective workmanship.

9 The plaintiffs' solicitors received no reply to this letter, but on 30 April 1997 the first defendant lodged a claim with the Building Disputes Tribunal constituted pursuant to the provisions of the Consumer Claims Tribunal Act 1987 ("the Act'). [The Act was repealed by the Consumer Claims Act 1998, as from 1 March 1999]. Each of the plaintiffs was joined as a party in these proceedings. The amount of the claim was $19,935. Mr G Vardas was appointed Referee and the matter was first listed for hearing in September 1997. The precise date was not stated in evidence.

10 It is convenient, before referring to the evidence of what transpired before the Tribunal, to note the two specific bases on which the plaintiffs contend there was a denial of natural justice or procedural fairness. The first ground is that the Referee failed to comply with the obligations imposed upon him under section 26 of the Act. Section 26 is in the following terms:-

Procedure to be followed when a tribunal's jurisdiction is disputed (1) If, before a tribunal has determined a consumer claim, the jurisdiction of the tribunal to hear and determine the claim is disputed by a party to the claim, the tribunal must not proceed to determine the claim without first giving a ruling as to whether or not it has that jurisdiction (2) A tribunal must not, of its own motion, make an order under section 30 (2) (a) dismissing a consumer claim for want of jurisdiction without first giving a ruling as to its jurisdiction to hear and determine the claim. (3) If a tribunal has given a ruling under this section in respect of its jurisdiction to hear and determine a consumer claim, it must not determine the claim: (a) until at least 14 days have elapsed since the day on which the ruling was given, or (b) if, before it has determined the claim, it becomes aware that proceedings for relief or a remedy of a kind mentioned in section 12 have been instituted in a court in respect of the ruling - until those proceedings have been concluded.

11 The plaintiffs contend that at the outset of the hearing David and Michael Khoury both claimed that they should not have been joined in the proceedings because they were not contracting parties with the first defendant, the sole contracting party being, they submitted, Mrs Khoury. Having raised that point the plaintiff's contend that the Referee failed to follow the procedure laid down by section 26 and merely overrode the objection.

12 The second ground is associated with section 32 of the Act which is in the following terms:- Limitation on tribunal's jurisdiction to make orders

(1) A tribunal has no jurisdiction to make in respect of a particular consumer claim an order or orders in favour of the claimant or, where there are 2 or more claimants, in favour of those claimants if the total of:

(a) the amount or amounts (if any) of money to be paid, (b) the value or values (if any) of the work to be performed, or the service to be supplied, (c) the amount or amounts (if any) of money to be declared not to be due or owning, and (d) the value or values of goods (if any) to be delivered or replaced, under or by virtue of the order or orders would exceed the prescribed amount.

(2) A tribunal has no jurisdiction to make in respect of a particular consumer claim an order or orders in favour of the respondent to the claim, or where there are 2 or more respondents to the claim, in favour of those respondents if the amount or the total of the amounts (if any) to be paid under or by virtue of the order or orders would exceed the prescribed amount.

13 For the purposes of section 32 the prescribed amount in relation to a building claim is $25,000. (See Regulation No 71 of 1994)

14 In this regard the plaintiffs contend that they submitted a cross-claim in excess of $25,000 and informed the Referee that as there was an excess over the prescribed amount under section 32, the Tribunal lacked jurisdiction to hear the claim. 15 The plaintiffs also seek to rely in a more general way, upon what they contend was an irregularity in the circumstances under which the Referee's decision was handed down. 16 Against that background it is relevant now to consider the evidence, which was unfortunately incomplete in important respects, tendered in this Court.

17 As I have already indicated the first hearing date was in September 1997. A second hearing by the Tribunal took place on a date in October 1997 and a third hearing, combined with a site inspection, took place on a later date in October 1997 and the final hearing took place on 20 November 1997, when the Referee reserved his decision. It would appear that on each occasion the hearings were relatively brief. I shall refer at this stage, to the affidavit evidence which was before me. Mrs Khoury deposed that at the first hearing she tried to tell the Referee that she owned the property and she was the sole contracting party. However, the Referee, she contends, ignored her and only spoke to David Khoury. She heard him say to David, "You can't have a lawyer - you don't need one, but you can have an interpreter". Mrs Khoury did not need an interpreter but could not understand why her husband and son were involved in the proceedings. On this occasion the Referee was informed that the plaintiff's cross-claim was not finalised. She said that did not seem to matter because the hearing only went for about an hour.

18 On the second occasion, she heard David say: "We're claiming more than $25,000" and the Referee said: "You can't do that."

19 At the site inspection she said to the Referee: "I want to stop the case." She did not finish the sentence when the Referee said: "If you're going to say anything I'll walk out." Thereafter she felt embarrassed and said nothing more.

20 David Khoury deposed that, at the first hearing, he said that he did not know why Michael and he were present. He said that the first defendant had an interpreter but that none of the plaintiffs needed an interpreter. He did not understand the legal nature of the proceedings nor the way the case was conducted. He said that when asked by the Referee if he wished an interpreter, he replied "No, I don't want an interpreter. Michael and I are not owners of the house and we didn't contract with Kassim. My wife received the quote and it's her house." The Referee replied "I'm not interested in that. Do you have a cross-claim?" David replied "Yes she does but it's not ready today." The Referee responded "Well I'll start with Mr Kassim's claim." He then embarked upon the hearing of that claim, which lasted for about one to one and a half hours.

21 At the next session, David Khoury presented the experts reports obtained by the plaintiffs. One was from a quantity surveyor named Martin, and the other was from "Tyrells." David said to the Referee. "This claim is about $30,000. It is more than your jurisdiction and I want to stop the case and take it to court." The Referee then said to Mr Kassim "What do you say" and Mr Kassim replied through the interpreter "I object to that course." The Referee said "You have to go on with the case. I can only give you a judgment on $25,000." David replied "I only want to proceed if you can give me the order I want."

22 David said "We did not walk out of the hearing," because I did not want the Referee to hear Mr Kassim's claim without my being present. David said "I did not know what to do so we stayed in the hearing."

23 David confirmed that at the site inspection Mrs Khoury said to the Referee "I want to stop our claim." The Referee pointed his finger at her and said: "If you keep talking, I'll walk out."

24 Michael Khoury deposed that at the first hearing he told the Referee that he was neither the proprietor nor a contracting party. However, the Referee did not seem to pay any attention to him or to what he said. He said that when the Referee asked about the cross-claim, he stated "I can't hear the case if your claim is more than $25,000", and his father replied "Let's see what happens - I don't have the report yet."

25 Michael deposed that at the site inspection he heard his father say "My claim is more than $25,000 I want to go to court to fight this, you can't make the order I want." The Referee replied "Once I give a decision its binding. If you're going to get out, do it now." Having said that, however, the Referee continued to ask questions and hear the case.

26 In his affidavit Mr Kassim asserted that the Referee warned David Khoury about the $25,000 limit and gave the plaintiffs the option not to proceed with the case but David did not raise any objection "in relation to the jurisdictional issue." Indeed he said words to the Referee to the effect. "It is OK go ahead."

27 Mr Kassim said that Mrs Khoury kept interrupting the Referee with rude comments addressed to Mr Kassim by saying things like "This man is stupid."; "This man is dumb". At one stage the Referee told Mrs Khoury words to the effect "Unless you stop interrupting I will walk out."

28 Mr Kassim deposed, with regard to the contractual arrangements. "I contracted directly with Michael and [David] Khoury. Mary Khoury was the decision maker. Mary used to [say] things to the effect that, "I am the boss here and what I say goes.".

29 On the fourth occasion the Referee heard some submissions from the parties, read experts reports and reserved his decision.

30 I turn then to the oral evidence given by the various parties. Mary Khoury said in cross-examination that David and Michael carried out the negotiations with Mr Kassim because he ignored her. She really knew nothing about the terms of the contract. It was put to her in cross-examination, "Let me put it to you simply, did you at any stage think you had a contract to do the work between yourself and builder?" Mrs Khoury answered "No."

31 In evidence David Khoury said that during the course of the building work he had a heart attack necessitating a triple by-pass. He never met with the builder on site. He only spoke to him on his mobile phone. After the full contract sum had been paid, David asked the builder several times to come and rectify the defective work, which he refused to do.

32 David reiterated his contention that he was not a party to the building contract.

33 David said that after receiving the claim form from the Building Disputes Tribunal he discussed the matter with his solicitor who told him that he could not act for him before the Tribunal. However, during the course of the Tribunal hearing he remained in contact with his solicitor and spoke to him at the end of each hearing day. He agreed that from the date of his solicitor's letter of 13 November 1996 to the builder's solicitor and the date of the application to the Tribunal, namely 29 April 1997, he did not do anything at all relevant to his dissatisfaction with the building work.

34 Although this part of David's evidence is not fully reproduced on the transcript, he did explain that he took no steps on "humanitarian" grounds, meaning that he did not think it was right for him to sue a person of the same ethnic background in a "foreign country". This answer was partly reproduced on transcript page 15 lines 39-41.

35 Importantly David dealt with the fact that he continued with the cross-claim in the Tribunal by asserting that he was "forced by the Arbitrator" to do so, his contention being, that as the builder wished to proceed with the case, the Referee indicated that he was going to continue and, according to David, this left him with no option but to remain in the Tribunal.

36 David explained his attitude in his own words as follows: "He asked me the question that I knew he can't go beyond $25,000. Well he said, "I am going to proceed with the case". I don't know one hundred percent whether I can stop him or not. I thought he got the power to carry on without my consent over the limit so we carried on and I said to him at the time does not matter what outcome is I still have to take it to the court. He said it in his judgment too. He said it in his judgment, I object, then he said I have to take the case to the court because he receive the instructions from one side. He did not attempt the right case, one to one case whichever, couldn't win. I object to the $25,000 to proceed with the case which then claimant or plaintiff wanted to proceed so I agree with him. In that case I assume in my mind he is doing something bias. I assume, I am not saying his is, so he deny the right to someone and he grant right to another. This I get it in my mind." (Tpt 18)

37 Incidentally, David is a retired builder of many years experience. He agreed that he had negotiated terms of the contract with the builder over three meetings within the course of two weeks.

38 In evidence Michael Khoury reasserted his belief that the contract was solely between the builder and his mother. He said on more than one occasion "Mum contracted with the builder. I wasn't present, I don't know what went on." He agreed in cross-examination that the Referee volunteered the information and gave a warning that he could not hear the case if the cross-claim was more than $25,000.

39 Mr Kassim gave evidence that he is a licensed carpenter, joiner and roof tiler. He does not have a builder's licence.

40 Relevantly his evidence in relation to the negotiation of the contract is as follows: Q Mrs Khoury was on the site almost every day, wasn't she? A David.

Q Mary Khoury? A Yes, come every day.

Q And she was the decision maker, wasn't she? A Not really, she part of three.

Q She used to say things like, "I am the boss here and what I say goes", didn't she? A She said first time to the last time.

Q She said to you that she was the boss? A She said first time to the last time before we start and then at the end of the job. That's what I hearing, that she is the boss.

Q And was it to Mary that you gave the price to do the job? A Three together was in the unit somewhere, David, Michael and Mary.

Q Did Mrs Khoury tell you that she was the owner of the property? A No, not first time.

Q I suggest to you that she was the person who made the decisions about what was going to happen on the job? A Mrs Khoury, all the family. I know from three or four years before, I deal with them. Anyone I can deal with them, talk to David, second time Michael, first time Mary. Everytime everyone make decision so I feel the home owned by three, not by one.

Q Was it the case that you preferred to talk man to man with Mr Khoury rather than talking to Mrs Khoury? A Mr Khoury, David?

Q Yes? A I talk with him, he call me come and see the plans and come and see the job but to deal with Michael because Michael architect, he know how to explain to you.

Q Michael gave you directions about how to actually do the building work? A Michael give me directions and me and him work how to finish the job and he is young, I am old in the building, so I give him and me together, we talk about how to do it this job, change this one, change this one, we did it with Michael.

Q Did you feel more comfortable talking to David Khoury than Mrs Khoury? A I feel comfortable to talk with all the family. I like these people, I didn't feel one better than the other one.

Q Michael Khoury talked to you about the building design, didn't he? A Yes.

Q He talked about the plan? A Yes, about the plan and also I give him a look for the plan, how to change this one. We talk frankly, I know him before.

Q But Mrs Khoury made the decisions, didn't she, about the work that was to be done? A I don't think so because the report for the work, I hear from David, from Michael, from David Khoury always when he talk to him, David talked to my friend, he know about the plan. This is more better you than me.

Q Have a look at paragraph 12 of your affidavit, the second page near the top? A Yes.

Q Read that to yourself for the moment? A Yes.

Q You say in that paragraph that Mary Khoury was the decision maker. Mary used to say things to the effect that, I am the boss here and what I say goes". That's right, isn't it? A Yes, she say, "I am boss for the pay the money", and she kick me out, don't want to talk to me when I finish the job.

Q Did you say she is the boss for paying the money? A I couldn't control wages for me, when we start deal with me and by time change, every time this change talking, everytime. I can't tell you exactly, this first time it was Mrs Mary, she is the boss. Second time everyone say Michael the boss. Before I finish the job Mr David the boss and before I finish Mr David and Mr Michael refer to me, "we are nothing here, you talk to my mother and my wife because she is the boss". That is all I know about this family. 41 He said later that he believed that all three were contracting parties. With regard to the question of the plaintiffs cross-claim exceeding $25,000 Mr Kassim gave the following evidence under cross-examination:- Q And Mr Khoury said to the referee that his claim was about $30,000 and he wanted to go to court? A Not second time, third time site hearing. He said at site hearing first time.

Q You remember, I am staying with the second time at the moment, you heard the referee say that he could only make a decision up to $25,000, didn't he? A Yes.

Q And he told Mr Khoury that, didn't he? A Yes.

Q And Mr Khoury said, "I want to go to court", and the referee asked you what your attitude to that was? A Mr Khoury said something but my claim is less than $25,000, his case is $25, not over 25. Mr Khoury not say for the referee because this matter, for the other matter. He said, "I want to go to the court, I want him to lose house", something different, not in the question.

Q You say it wasn't because of the $25,000? A No. When referee said 25,000 and over 25 is not here, so Mr David Khoury doesn't answer. He answer later on about something else.

Q But at some point he said he wanted to go to court? A He wanted to do something bad for me.

Q I suggest to you he said, "My claim is about thirty thousand, it is more than your jurisdiction. I want to stop the case and take it to court"? A No, not second hearing.

Q And the referee asked you what you thought and you said, "I object to that", and the referee said, "Well, you have to go on with the case". A No, I don't hear anything for the second hearing. For the third hearing I somebody.

Q At the third hearing, that was the one on site? A Yes.

Q And on that occasion Mr Khoury said he wanted to go to court, didn't he? A Yes.

Q He or Mrs Khoury said, "I want to stop the claim and go to court"? A Mr Khoury say.

Q And the referee said, "You can't do that"? A No, he didn't say it this way. He said, "You can't do it but we now already done three times. If you want to stop it you can. You want to carry on, we carry on". Mr Khoury said, "All right, carry on", that's all he saying there, that's what happened exactly. 42 The Referee reserved his decision on 20 November 1997. On 8 July 1998 Michael Khoury received a letter from the Registrar, Consumer Claims Tribunals, in the following terms:- "I refer to a claim you have lodged with this Tribunal and which was last heard on 20 November 1997 before referee Mr Vardas.

As you are aware this matter was reserved for a decision at that time.

As Mr Vardas is now overseas and his return date is unknown, the matter has been re-listed before another referee for rehearing.

I apologise for any inconvenience this situation has caused.

In order to finalise these proceedings as soon as possible could you please ensure you bring all documentation and /or witnesses.

43 The hearing notice which was attached to the letter was again addressed to each of the plaintiffs and specified a hearing date of 4 August 1998. (No evidence was led before me as to what transpired on 4 August 1998).

44 On 22 July 1998 Messrs Photios Vouroudis & Co wrote to the Registrar on behalf of the plaintiffs in the following terms:- "We act for Michael, Mary and Deeb (David) Khoury, who have handed to us your letter dated 8 July 1998.

We are instructed by our client that this matter was heard over a matter of four (4) days between September 1997 and November 1997, which included a view of our client's property.

Further, our client's incurred costs in the order of Three Thousand Four Hundred dollars ($3,400.00) to present expert evidence and have witnesses available for cross examination.

We are also instructed that our client has filed a Cross-Claim seeking recovery of approximately Twenty Eight Thousand dollars ($28,000.00) which we respectfully submit places this matter outside the jurisdiction of the Tribunal.

In these circumstances, our client objects to the matter proceeding for a rehearing and intends to initiate civil proceedings through the Local Court at Burwood.

Kindly confirm that the hearing date of the 4 August 1998 is now vacated".

45 The Registrar did not reply to that letter, but thereafter forwarded a document entitled "Notice of Order' addressed to David Khoury stating that: "At Hurstville on 24 August 1998 the following reserved decision was made: I order that the respondents pay to the claimant the sum of $7,500 within one month".

46 Annexed to that notice was the undated reserved decision of Referee Vardas. The amount of $7,500 was calculated by the Referee as follows:-

The agreed contract sum $26,000 Add: variations allowed 11,500 Deduct: allowance for rectification of the roof 5,000 32,500 Less: Payments to date 25,000 Award $7,500

Thus the Referee made an order against all the respondents within the meaning of s.30(1)(a) of the Act which was capable of enforcement under the provisions of Division 4 of the Act. 47 The Referee's reasons, which occupied some 5¼ pages, made no reference to the issue of the identity of the parties to the oral contract for the building work. However, it contained the following observations under the subheading "Jurisdiction". Jurisdiction

At the initial hearing of this matter the respondents were granted leave to bring a cross-claim, as it were, against the claimant. This was presented through two separate bills of quantities prepared for the respondent.

At the onsite hearing David Khoury stated that he had previously misread the way in which his quantity surveyor had compiled the reports and that it appeared to him that his cross-claim was greatly in excess of the jurisdictional limit of this Tribunal. At that point I indicated to Mr Khoury that he ought to consider his position carefully given that if I was to make an order in his favour I could not award more than $25,000.

At the subsequent (and final) hearing of the matter, I again addressed this problem with the parties and explained that depending on my view as to the prospects of success of the cross-claim I could decline to hear the matter thereby allowing the parties to litigate their dispute in a court. Mr Khoury responded that he wished the matter to proceed and that he understood the jurisdictional limitations imposed upon this Tribunal and that he was prepared to abide by any determination made by the Tribunal.

48 The Referee returned to this matter later in his decision under the subheading "on site inspection" in the following terms:- On site inspection

On 24 October 1997 I attended at the respondents' house to conduct an onsite hearing and inspection. At the outset, Mr David Khoury said to me that he had been advised by his loss assessor that his total damage now exceeded the jurisdictional limits of the Tribunal and that he wanted the matter to be heard by a court. At that point he handed to me a second loss assessor's report (referred to earlier) which sought to clarify the claim for damages.

I indicated to Mr Kassim in the presence of the interpreter that Mr Khoury was seeking to have the matter re-litigated in a court because potentially his cross-claim exceeded the jurisdiction in the Tribunal.

Mr Kassim responded that it was his claim and that he wanted the matter finalised by the Tribunal.

I then discussed the matter with the parties and pointed out that if both the claim and cross-claim were to proceed in a court it would take longer and be more expensive in terms of legal costs and that I would have to be satisfied that Mr Khoury had reasonable prospects of recovering close to the amount that he now claims to have suffered as a loss arising out of the building works. As I indicted earlier in this judgment, Mr David Khoury agreed to have the matter determined by the Tribunal.

49 I note that when dealing with the "respondents reply and cross-claim", the Referee said: "At times Mr David Khoury became quite emotional about the defence of this claim and it would be fair to say that, in summary, the respondent's case is that the claim for variations bought by Mr Kassim has been fabricated and that indeed Mr Kassim is guilty of defective and incomplete workmanship in circumstances where the respondents are entitled to set up and rely on a cross-claim for an amount potentially exceeding the jurisdictional limit of this Tribunal."

50 The Referee then went on to deal with the cross-claim. It is apparent from what has been stated earlier in this judgment, that although the cross-claim exceeded $25,000, the respondents succeeded only to the extent of $5,000. On the other hand the variations claimed by the builder amounting to $19,935 were reduced by the Referee to $11,500.

51 I must confess that I have found the resolution of this matter to be an extremely troublesome one. The matter has been complicated by the difficulty of witnesses before me attempting to express themselves accurately in English, which is not their first language. Regrettably, but not uncommonly in disputes about the family home, the matter has now developed a very strong emotional overlay. A recent example of how disputes about the family home can get out of hand is to be found in the judgment of the Court of Appeal in Sweeney & Anor v Coffey Pty Ltd & Anors [1999] NSWCA 38 (unreported, 16 February 1999).

52 Section 17 (1) of the Act provides that: "Except as expressly provided by this Act or the regulations, a tribunal has control of and responsibility for its own procedures, but in exercising its functions under this Act must conform to the rules of natural justice."

53 The tension between the intention of the legislature in providing what is intended to be speedy, inexpensive and informal procedures for the resolution of relatively small disputes on the one hand and the need for the Tribunal to conform to the rules of natural justice on the other hand has been the subject of judicial comment on a number of occasions.

54 I take the opportunity of repeating in this regard the remarks of Simpson J in Archcom Pty Limited v Consumer Claims Tribunal (unreported 29 September 1995) where her Honour said (at pages 12-14): "Underpinning the Act is a policy of providing expeditious access to an inexpensive and informal process for the resolution of consumer disputes involving relatively small amounts of money. Speed and economy are to be accompanied, and (it is hoped) often achieved, by informality. ……………………………….. The intention of the legislature, in creating these tribunals as a forum for the resolution of disputes involving relatively small amounts of money was the achievement of expeditious and inexpensive justice between the parties while maintaining a proper regard for, and protection of, the rights of the parties to the dispute. The difficulty, as I see it, lies in striking the correct balance between those two goals. Speedy and inexpensive solutions may be inimical to the protection of rights. There is no necessary relationship between the factual or legal complexity and the quantum of a claim but legal rights and obligations remain at the heart of the tribunal's jurisdiction. Although a tribunal is enjoined to make such orders as will, in its opinion, be fair and equitable to all parties to the claim (s31(1)), those orders must be grounded in legal liability: Fairey Australia Pty Limited v Joyce (1981) 2 NSWLR 314; White v Hall (1983) ASC 55-247, State Rail Authority of NSW v Consumer Claims Tribunal (1988) 14 NSWLR 473".

55 Reference should also be made to the judgment of Graham AJ in Fintron Pty Limited v The Registrar, Consumer Claims Tribunals & Ors (unreported, 16 December 1997) where observations of a similar nature are made and which also contains a reference to Archcom.

56 It is inevitable that questions of law or mixed questions of law and fact will arise in matters before the Building Disputes Tribunal. This can impose a difficult burden upon a Referee who has no legal qualifications and who has parties before him or her who are disentitled to legal representation. If a pure question of law or a mixed question of law and fact arises during the course of a hearing, however, it becomes necessary for the Referee to identify the point, hear submissions from the parties with regard to it, and provide them with a decision on the question.

57 I am quite satisfied that the present plaintiffs clearly raised before Referee Vardas the issue of who precisely were the parties to the building contract. David and Michael Khoury clearly enough contended that the sole contractor on the owner's side was Mrs Khoury. Somewhat remarkably, it may be thought, in evidence before me, she denied that she at any stage thought that she had a contract with the builder. I have a suspicion that Mrs Khoury did not quite appreciate the full impact of what was fairly being put to her in that question. However, for present purposes I do not think that anything really turns on that. The question of who the parties to the contract were, was clearly raised before the Referee and the parties before him were entitled to a ruling thereon.

58 I have no hesitation in saying, by reason of the confused evidence which was given before me, that the Referee would not have found that question an easy one to resolve. However, it was obligatory upon him to resolve the question before he made orders under section 31 against each of the respondents, thereby subjecting them to the enforcement provisions in Division 4 of the Act.

59 Section 26 of the Act which has been quoted above sets out the procedure to be followed when a Tribunal's jurisdiction is disputed. 60 It is necessary now to address the question whether the plaintiffs disputed the jurisdiction of the Tribunal within the meaning of s 26 with regard to the claim against David and Michael. It is necessary, therefore, to turn to the relevant provisions of the Act dealing with a building claim. Section 10(1) provides: "Subject to this Act, a Tribunal has jurisdiction to hear and determine any consumer claim referred to it in accordance with this Act." 61 Relevantly, section 3(1) defines 'consumer claim' to mean: "(a) a claim by a consumer for the payment of a specified sum of money,……… that arises from a supply of goods or services by a supplier to a consumer, whether under a contract or not, or that arises under a contract that is collateral to a contract for the supply of goods or services." 62 Now s 12A(1) which is included in Part 3A 'Building claims and rectification orders' provides that in this Part: 'Building claim' means a claim for: (a) the payment of a specified sum of money, …….that arises from a supply of building goods or services whether under a contract or not, or that arises under a contract that is collateral to a contract for the supply of building goods or services." 63 Section 12B (relevantly) provides that: ""For the purposes of the Act, a building claim is to be considered to be a consumer claim and a person who makes a a building claim is to be considered to be a consumer: (a) despite the definitions of consumer and consumer claim in s 3(1), and (b) even when the claim is made by a supplier." 64 Thus, in the instant case the question whether the Building Disputes Tribunal had jurisdiction over David and/or Michael (who protested jurisdiction) would depend upon whether the first defendant had a claim against them for the payment of a specified sum arising from a supply of building goods or services arising under a contract, or otherwise. They contended that they were not parties to any contract with the first defendant. 65 As to the second alternative, the question would arise here as to whether in the absence of any contractual liability, there was nevertheless a legal liability such as a liability under a relevant statute or by tort: See Fairey Australasia Pty Ltd v Joyce [1981] 2 NSWLR 314 at 321 where Yeldham J said: "It is, of course, plain that the person against whom an order is made must be one who has a legal liability to the consumer. The Act is not concerned with 'Palm tree justice'."

Thus I am satisfied that David and Michael disputed the

jurisdiction of the Tribunal within the meaning of s 26. 66 However, the question of jurisdiction was not addressed at all by the Referee and accordingly no ruling was given under s 26(1). 67 There is insufficient evidence before me to determine whether the Tribunal did in fact have jurisdiction to make orders against David and Michael. The grievance which those two plaintiffs have is that the Tribunal erred in refusing or failing to give a ruling after its jurisdiction was disputed. If the ruling had been given and was adverse to the plaintiffs, then they could have sought judicial review under s 12. 68 Section 12 of the Act is in the following terms:- Tribunal to be immune from judicial review

(1) Except as provided by subsection (2), a court of record has no jurisdiction to grant relief or a remedy by way of: (a) a judgment or order in the nature of prohibition, mandamus, certiorari or other prerogative writ, (b) a declaratory judgment or order, or (c) an injunction, in respect of a consumer claim heard and determined or to be heard or determined by a tribunal in accordance with this Act or in respect of any ruling, order or other proceeding relating to such claim.

(2) A court is not precluded from granting relief or a remedy of a kind referred to in subsection (1) if, in respect of a consumer claim: (a) a tribunal has given a ruling under section 26 or refused or failed to give such a ruling after the jurisdiction of the tribunal to hear and determine the claim has been disputed by a party to the claim and the ground on which the relief or remedy is sought is that: (i) the ruling was erroneous, or (ii) the tribunal erred in refusing or failing to give the ruling after its jurisdiction was disputed, or (b) a tribunal has made an order under section 30 and the ground on which the relief or remedy is sought is that: (i) the tribunal had no jurisdiction to make the order, or (ii) in relation to the hearing or determination of the claim, a party to the claim had been denied natural justice.

69 I am of the view, therefore, that this Court is not precluded from granting relief or a remedy of the kind referred to in subsection 12(1) because the Tribunal failed to give a ruling under section 26 after the jurisdiction of the Tribunal to hear and determine the claim against David and Michael Khoury was disputed: See s. 26(2) (a) (ii).

70 I turn then to the second major leg of the plaintiffs case which relates to the limitation on a Tribunal's jurisdiction to make orders pursuant to section 32 of the Act, the terms of which I have set out above. It is important to note, at the outset, that section 32 does not provide that no claim or cross-claim may be lodged with the Tribunal which exceeds the prescribed amount (here $25,000), but rather that the Tribunal has no jurisdiction to make an order in favour of either the claimant or the respondent which exceeds $25,000. See Hales v Consumer Claims Tribunal & Anor (1990) ASC 55-975; Sandford v Marjen Building Contractors Pty Ltd & Ors (1992) ASC 56-148. It is thus to be distinguished from, for example, s 44 of the District Court Act 1973 as amended.

71 Thus in the instant case, the Referee had jurisdiction to hear both the original claim and the cross-claim (albeit that it exceeded $25,000) subject to the limitation that having balanced the amount allowed under the claim, as against the amount allowed under the cross-claim, there could not be a net order which exceeded $25,000. This, I think, was what the Referee had in mind when he said in his reserved decision: "At the subsequent (and final) hearing of the matter, I again addressed this problem with the parties, and explained that depending on my view as to the prospects of the success of the cross-claim I could decline to hear the matter thereby allowing the parties to litigate their dispute in a court."

72 The Referee was faced with a difficult situation in the hearing before him in that unquestionably Mr Kassim wished to proceed with his claim, whereas the plaintiffs did not wish to proceed with the cross-claim; they wished for both matters to be litigated in the Local Court. However, they faced the dilemma that if the Referee continued to hear the builder's claim they would suffer what they perceived to be, a serious tactical disadvantage by withdrawing their cross-claim and commencing their own proceedings in the Local Court. In essence this is why I consider that Mr David Khoury reluctantly agreed to the whole matter continuing before the Referee

73 It should be noted in this context that section 16 provides: "At any time before a tribunal has finally completed its hearing of a consumer claim and before the tribunal has begun its determination of the claim, the claimant may withdraw the claim."

74 The evidence fails to satisfy me that at any stage prior to the Referee reserving his decision on the fourth and final hearing date, the plaintiffs withdrew the cross-claim within the meaning of section 16. However, the matter does not end there because a nice question arises as to whether the letter dated 22 July 1998 from Photios Vouroudis & Co, to the Registrar of the Consumer Claims Tribunals, constituted a withdrawal of the cross-claim within the meaning of section 16. 75 Section 16 raises difficult questions of construction. As the final completion of the hearing of a claim must necessarily occur at an earlier time than the beginning of the determination of the claim, it is difficult to discern the legislature's intention in specifying that that withdrawal must occur prior to both the specified events occurring. Perhaps the legislature may have been concerned that there could have been an overlapping between the completion of the hearing and the beginning of the determination and wished to ensure that there could be no withdrawal after the hearing had been completed or after the determination had begun. 76 In the instant case the plaintiffs, in effect, sought to withdraw the cross-claim after the hearing had been completed but before the claim had been determined. I would doubt that this purported withdrawal would satisfy the terms of s 16. In any event it is not a matter upon which I heard argument.

77 The matter is complicated in this case by reason of the letter dated 8 July 1998 from the Registrar of the Consumer Claims Tribunals and the "Notice of Hearing/Relisting" of the matter. The question arises as to the legal effect within the terms of the Act of the listing of the matter before another Referee.

78 The Registrar stated in the letter dated 8 July 1998, that "the matter has been relisted before another Referee for rehearing". That means, of course, that a new Tribunal must have been constituted pursuant to the provisions of section 5 of the Act. This fresh Tribunal must have been constituted by the senior Referee [see subsection 5(2)]. A question then arises as to whether the original Tribunal constituted by Mr Vardas had necessarily been disbanded and divested of authority to resolve the matter. 79 Section 18(4) provides that if the hearing of a consumer claim by a Tribunal is before the Tribunal has determined the claim, interrupted by the incapacity or vacation of office of the referee who constitutes the Tribunal, the senior referee must, if the claimant wishes to proceed with the claim, make arrangements for the hearing and determination of the claim to be recommenced before a Tribunal constituted by another referee. I assume that the senior referee was discharging his or her responsibilities under s 18(4) when he or she set-up the new Tribunal in the present case.

80 As I have indicated there is no evidence before me as to what happened at 9.00am on 4 August 1998 at Level 4, 4-8 Woodville Street Hurstville, the date and place for the fresh hearing of the claim. Nor have I had the benefit of the relevant Tribunal files and the Referee's notes being tendered in evidence.

81 The crucial matter, it seems to me, is that the plaintiffs were entitled to a response to their solicitors' letter dated 22 July 1998 bearing in mind their expressed concern about the cross-claim and the notification of re-listing. They were entitled to have their legal position clarified in this regard. However, they received no response or opportunity to be heard. In lieu thereof they had imposed upon them, without explanation, an adverse decision of questionable validity. This irregular course of affairs would inevitably leave them with a justifiable sense of grievance. 82 Ms Olsson for the plaintiffs submitted that the intervention of this Court was justified by the concatenation of circumstances associated with the hearing which, she submitted constituted a denial of natural justice to the plaintiffs. 83 I am persuaded that this is the correct view. The plaintiffs are entitled to believe that they had not had "a fair deal" to use the expression of Lord Denning MR in Performance Cars Limited v Secretary for State of the Environment (1977) 34 P.&C.R. 92 at 97 or "a fair crack of the whip" to use the more picturesque expression of Lord Russell of Killowen in Fairmount Investments v Secretary of State [1976] 2 ALL ER 865 at 874 84 No discretionary considerations lead me to a contrary view.

85 Accordingly I order that the Tribunal's decision and order of 24 August 1998 are quashed. I shall give the parties the opportunity to make submissions on costs in the light of this judgment.

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